Are Credit Report Errors Almost Impossible to Fix?

The three top credit bureaus that have a strangle-hold on your credit score are getting a very poor performance report. A new analysis by the Consumer Financial Protection Bureau says that Equifax, Experian, and TransUnion are "routinely" failing to respond to consumer complaints about errors. Their performance is allegedly so bad that the CFPB says only "two percent" of complaints were addressed last year. (1) Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review. As you know, a good credit score is extremely important for things like getting a credit card or buying a home. In the case of a home purchase, a higher credit score means you'll get a lower interest rate, and save tons of money over the life of the loan. Credit scores can also play an important role in other kinds of decisions, such as the hiring of a new employee, the approval of a rental applicant, or the issuing of a new insurance policy. Whatever the game plan, the higher the credit score, the better the outcome for the consumer. And that means you don't want any errors that will bring that score lower. The Right to Dispute Errors When those errors occur, consumers have the right to dispute that information, and to have it fixed. According to the CFPB, most of the complaints sent to the bureaus qualify for a mandatory response, but they apparently "changed" the process for responding to complaints in 2020. According to the CFPB's report, that has resulted in a faster process for closing complaints and a much lower rate of resolution, from 25% in 2019 to just 2% last year. The CFPB director Rohit Chopra told realtor.com: "America's credit reporting oligopoly has little incentive to treat consumers fairly when their credit reports have errors." He says the CFPB report is "further evidence of the serious harms stemming from their faulty financial surveillance business model." (2) The CFPB typically includes information on consumer complaints in its Consumer Response Annual Report. This report is a stand-alone analysis because of the huge number of complaints it received from consumers who aren't getting their credit reports fixed. The report says that between January of 2020 and September of 2021, the CFPB received more than 800,000 complaints. More than 700,000 of them were directed at Equifax, Experian, or TransUnion. Consumers are obviously frustrated about the situation. Among the issues, they say: 1 - They were caught in an automated response system that did not result in a solution to their problems. 2 - They were left without options when the source of the incorrect data argued against them… and… 3 - They wasted a lot of time, energy, and money trying to get errors fixed, but were unsuccessful. Consumers At a Disadvantage If you haven't dealt with this issue yet, the Washington Post published an article that paints a very clear picture. In one example, it says a creditor incorrectly reports that you were horribly late on a payment. As a result, your credit score drops substantially. The consumer then files a complaint with the credit bureaus and provides proof that the late payment never happened. (3) The credit bureaus contact the creditor who gave the wrong information. They are called 'data furnishers" by industry insiders. The creditor allegedly checks the data and sends the same bogus data back to the credit bureaus, which then tell the consumer that the creditor has "verified" that the information is correct. As the Post article says: "This back and forth goes on for months, or for the truly unfortunate, years." As if that's not bad enough, the Post article says that even for consumers who get the errors fixed, those same errors could suddenly find their way back to your credit report during computer updates that might pull old information from a large database. Obligated to Address Complaints Ed Mierzwinsky of the U.S. Public Interest Research Group says the credit bureaus "have never considered consumers as their customers. They've always considered consumers as a nuisance." They are obligated by law, however, to correct any errors, and they are supposed to do this within 30 days. In the CFPB report, it says: "The (credit bureau) responses to these complaints raise serious questions about whether they are unable–or unwilling–to comply with the law." This stand-alone report was submitted to Congress and could be used for debate on how to address the problems that consumers are having with the credit bureaus. As the report states: "More than 200 million Americans have credit files and nearly 15,000 providers furnish information about consumers to the (credit bureaus). Thus, the actions, and inactions, (by the credit bureaus) have large implications for consumers' financial well-being and the economy more broadly." You can read more the CFPB report by following the a link in the show notes at newsforinvestors.com. You're listening to the News For Investors podcast, which is produced by the real estate investing network, RealWealth. It's free to join, and free to access hundreds of webinars and articles on real estate investing. As a member, you also have access to the Investor Portal where you can view sample property pro-formas and connect with our network of resources. That includes experienced investment counselors, property teams, lenders, 1031 exchange facilitators, attorneys, CPAs and more. Click here to join now! Please remember to hit the subscribe button, and leave a review! Thanks for listening. I'm Kathy Fettke. Links: 1 -https://www.consumerfinance.gov/data-research/research-reports/annual-report-consumer-credit-reporting-complaints-analysis-of-complaint-responses-equifax-experian-transunion/ 2 -https://magazine.realtor/daily-news/2022/01/07/cfpb-credit-bureaus-fail-to-fix-errors-in-consumer-profiles 3 -https://www.washingtonpost.com/business/2022/01/07/fixing-credit-report-errors/